Corporate social responsibility and stock price crash risk: does analyst coverage matter?

The debate about whether corporate social responsibility (CSR) and analyst coverage facilitate financial transparency is still open among academics and practitioners to date. Drawing from the information asymmetry view, this paper aims to investigate the impact of CSR on stock price crash risk, and to examine the moderating effect of analyst coverage on the ‘CSR – crash risk’ nexus. Using a sample of 8037 firm-year observations from Chinese-listed firms between 2010 and 2018, we find that CSR is negatively associated with crash risk. Analyst coverage cannot catalyse the positive role of CSR in reducing financial opacity, and thereby weakens the negative association between CSR and stock price crash risk. This implies that analysts fail to sufficiently disseminate firm-specific information, which in turn aggravates the information gap between insiders and outside investors. Our results remain robust after considering potential endogeneity and alternative CSR measures. The current study advances the understanding of ‘CSR – crash risk’ relationship with the moderating effect of analyst coverage. We also provide important references for investors and policymakers to better understand abnormal stock price fluctuations.